How to find the right rental cabin to invest in

Have you been thinking about owning a rental cabin?

When people call me about buying a rental cabin, one of the first things they usually tell me is they “want to buy a cabin that is making a lot of money.” That makes sense. No one wants to invest in something that isn’t going to earn them a great return on that investment.

But what if you can make more money with the investment than the people who own it now?

I have made that the focus of my search for people who are looking strictly for a rental cabin as an investment. A property that isn’t doing well with rentals is generally priced below what it would be worth with a higher income. So when I can find them such a rental cabin that will produce a greater amount of rental income with some simple changes, then that is a win. A one or two bedroom cabin that is priced around $140,000 earning less than $25,000 but with the potential to earn $35,000 to $40,000 with some very simple changes will usually be worth a lot more on the market after those corrections are made. That is very important for when the new owner makes the decision to sell.

I don’t limit my search to the “discount section,” either. Sometimes, a high earning rental cabin is competitively priced for other reasons. (By “competitively priced,” I mean a cabin that is in a top producing area and doing well but priced at or below the cost of other cabins that are generating less in gross income.) Maybe the owner is ready to move on to other things, often another lucrative business venture, and is okay with making a little less at the closing table, since they’ve made so much on rental income. Sometimes life happens, and people have to make the difficult decision to let go of the “extras” in their life. And sometimes, it’s simply a matter of an owner being savvy with their rental cabin. We’ve seen several cabins in the last few months that were priced below their market value, and ended up getting offers that were above the asking price because the rental income was so high.

I’ve talked before about what amenities you will find in the top producing investment cabins. Some of these items include a game room, furniture that looks like it belongs in a rental cabin and not moved there from grandma’s house, an indoor pool, and amazing views of the mountains.

Lastly, it’s important to make sure the cabin you buy will increase in value after you move it to a higher rental income should the time come that you decide to sell. If the investment cabin you’re considering buying is priced at the top of what it can sell for regardless of rental income, then it may not be the best investment cabin. Even if you’re not planning to sell, life happens and circumstances change. You may decide a couple of years down the road that owning a cabin in the Smokies isn’t for you. Or you may decide you want a bigger cabin. Several of my clients have gone on to sell their cabin and buy a bigger one. I want you to have that flexibility with your new rental cabin.

If you want to learn more about owning an rental cabin, we would love to talk with you!